Foreign exchange rates can see a huge variation, changing daily with potentially dramatic price swings. Here is an example using the pound to euro conversion rate as an example:

Over the past month the GBP to EUR exchange rate was trending within the range of 1.2680 to 1.3269.

At the lowest point, £500 would have got you 634 euros, excluding any delivery fees should you have opted not to collect. The same amount in Sterling would have got you 663.45 euros at the best exchange rate at the time. Please note, we are using inter-bank rates here, which vary from the travel money rates you would be offered.

On Friday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.837

The live inter-bank GBP-EUR spot rate is quoted as 1.194 today.

The GBP to USD exchange rate converts at 1.258 today.

The pound conversion rate (against australian dollar) is quoted at 1.692 AUD/GBP.

The live inter-bank GBP-NZD spot rate is quoted as 1.765 today.

NB: the forex rates mentioned above, revised as of 9th Dec 2016, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

Since the turn of the year the British Pound has struggled versus all the major currencies including the Euro, US Dollar and Australian Dollar. This is mainly due to political uncertainty regarding the forthcoming EU referendum.

With little known as to the impact a British exit from the European Union would have on the domestic economy, any mention of the potential of a ‘Brexit’ has corresponded with Sterling depreciation. As such, investor confidence has cooled markedly.

An example of this can be seen in the GBP/USD exchange rate which has dropped from a high of 1.4407 to a low of 1.3940 in the past week alone.

So how does a weaker Pound affect your travel money?

Say you wanted £500 spending money when visiting France. At current levels, £500 converted into Euro’s at the current rate, approximately 1.27, would equate to €635. Just a week ago the GBP/EUR exchange rate was trading at 1.30 which would give you €650.

The exchange rate value has a greater impact the more travel money you wish to transfer.

February has been a highly volatile month for exchange rates, with the Pound diving in value following the announcement from Prime Minister David Cameron that the EU referendum will take place on June 23rd.

For quite some time Cameron has been negotiating with EU officials to reform the relationship between the UK and Britain. After a long talks, Cameron was successful in so much as EU member states have agreed to some reforms, but he failed to get everything he wanted.

The British Pound initially advanced in response to Cameron’s moderate successes, but the appreciation was short-lived. This was because political heavyweight Boris Johnson, the Mayor of London and a highly popular figure, announced that he would support those campaigning for the UK to leave the EU.

The British Pound plummeted in response with many analysts predicting further losses to come. Until the June 23rd vote, the Pound is very unlikely to sustain any significant gains. This means that you will likely get less Euro’s or Dollar’s for your Pound if you decide to travel ahead of the vote. There is, of course, the risk that the Pound could fall further following the result.

Pound to Euro Holiday Money Exchange Rate Compared

As of 24th Febraury 2016, it may surprise you that one of the best rates to buy your Euros would be via a high street shop. £500 will get you €624.73 provided by Debenhams, although this is collection only.

So When Should You Take a Holiday Based on the Best Exchange Rates in 2016?

Given the current Pound Sterling outlook there is no good time to take a holiday. With that said, however, there is every chance that the Pound could fall further so timing a holiday around key events is a must.

The most important economic event of 2016 will be the UK referendum. Timing a holiday based on the outcome would be a gamble, but it could pay off. If you went on holiday a week before the referendum your Pound is unlikely to get you a decent return. However, if you wait until after the referendum there is every chance that the Pound will plunge lower if the UK votes to leave the EU.

Major economic events aside, it is always worth consulting an economic calendar before planning a trip abroad. Any Bank of England (BoE) policy meeting usually coincides with GBP volatility. If the BoE opted to hike the benchmark interest rate, for example, the Pound would likely shoot up in value. Any speeches from BoE officials may also cause significant GBP movement.

With that said, however, political uncertainty is dominating market trade and is likely to do so in the build up to the referendum. Therefore, domestic data will be less impactful than usual.

Wanting to Holiday in the USA? Pound to US Dollar Exchange Rates have Dropped to a 7-Year Low.

In response to heightened fears that the UK will vote to leave the EU, the Pound Sterling to US Dollar (GBP/USD) exchange rate has dropped to a fresh 7-year low. What’s more, most analysts predict further losses to come given the long period of political uncertainty ahead of the referendum.

Over the past month the Pound Sterling to US Dollar (GBP/USD) exchange rate dropped from a high of 1.4650 to 1.3924.

Once again, if you had £500 to spend at the February high of 1.4650 you would get $732.50, but at the February low of 1.3924 you would only get $696.20.

Anyone who has holidayed in the tourist hotspots of the USA will know that £500 will not stretch very far, and the greater the amount of money you wish to transfer the greater the losses/gains on your exchange.

Pound, Euro and US Dollar Exchange Rates: Key Data/Events to Look Out For

There will be a number of economic events that could cause significant changes to exchange rates. As mentioned above, the EU referendum and the opinion polls leading up to the vote will have a significant impact on the British Pound.

In terms of the Euro and US Dollar, any central bank policy meetings or speeches from central bank officials usually coincides with volatility. March will be key for both the US and Europe with the Federal Reserve and European Central Bank (ECB) both due to make policy decisions.

The ECB is widely expected to ease policy in March which would cause the Euro to decline. This could be an opportune time to exchange travel money if you wish to visit Europe.

Why do interest rates affect my USD, EUR travel money?

A side effect of rising interest rates is that a currency gets stronger, while an interest rate cut weakens currency; so if the Bank of England were to (some might say miraculously) raise interest rates tomorrow, Pound Sterling would see a sharp increase in value, getting you more travel money.

Why Falling Consumer Prices are a Good Thing

Consumer prices fell last month in the Eurozone and if you’re looking for EUR travel money, that’s good news for two reasons.

Firstly, it means that goods and services were getting cheaper, so your travel money will go further, while secondly the news will weaken the Euro, resulting in you getting more for your money.

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Colin Lawrence

As well as producing in-depth analysis of the latest currency trends for ERUK, Colin heads up the Business...